iQIYI Provides Update on its Status under the Holding Foreign Companies Accountable Act

Rhea-AI Summary

iQIYI, Inc. (Nasdaq: IQ) announced it was identified by the SEC under the Holding Foreign Companies Accountable Act (HFCAA) on March 30, 2022. This identification arises from the Company’s filing of its annual report for the fiscal year ending December 31, 2021, indicating that its auditor's working papers could not be fully inspected by the PCAOB. According to the HFCAA, companies identified for three consecutive years risk delisting from U.S. exchanges. iQIYI is exploring solutions to protect stakeholder interests while complying with regulations in both China and the U.S.

Positive

• iQIYI is actively seeking solutions to address SEC concerns and protect stakeholder interests.
• The Company is committed to compliance with laws in both China and the U.S.

Negative

• The SEC's identification under HFCAA raises concerns about potential delisting from U.S. exchanges.
• iQIYI's auditor's working papers were not fully inspectable by the PCAOB, indicating potential regulatory risks.

BEIJING, March 31, 2022 /PRNewswire/ -- iQIYI, Inc. (Nasdaq: IQ) ("iQIYI" or the "Company"), an innovative market-leading online entertainment service in China, today announced that the Company is aware of the fact that it was identified by the United States Securities and Exchange Commission (the "SEC") under the Holding Foreign Companies Accountable Act of the United States (the "HFCAA") on March 30, 2022. Such identification may have resulted from the Company's filing of the annual report on Form 20-F for the fiscal year ended December 31, 2021.

The Company understands that the SEC made such identification pursuant to the HFCAA and its implementation rules issued thereunder. This indicates that the SEC has determined the Company used an auditor, whose working paper cannot be inspected or investigated completely by the Public Company Accounting Oversight Board of the United States (the "PCAOB"), to issue the audit opinion for the Company's financial statements for the fiscal year ended December 31, 2021.

In accordance with the HFCAA, a company will be delisted from a U.S. stock exchange if such company has been identified by the SEC for three consecutive years due to PCAOB's inability to inspect the auditor working paper related to such company.

iQIYI has been actively exploring possible solutions to best protect the interest of its stakeholders. The Company will continue to comply with applicable laws and regulations in both China and the U.S.

About iQIYI, Inc.

iQIYI, Inc. is an innovative market-leading online entertainment service in China. Its corporate DNA combines creative talent with technology, fostering an environment for continuous innovation and the production of blockbuster content. iQIYI's platform features highly popular original content, as well as a comprehensive library of other professionally-produced content, professional user generated content and user-generated content. The Company distinguishes itself in the online entertainment industry by its leading technology platform powered by advanced AI, big data analytics and other core proprietary technologies. iQIYI attracts a massive user base with tremendous user engagement, and has developed a diversified monetization model including membership services, online advertising services, content distribution, online games, live broadcasting, IP licensing, talent agency, online literature, etc.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. iQIYI may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about iQIYI's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, further information regarding which is included in the Company's filings with the Securities and Exchange Commission. All information provided in this press release is as of the date of the press release, and iQIYI undertakes no duty to update such information, except as required under applicable law.

For further information, please contact:

Investor Relations
iQIYI, Inc.
+ 86 10 8264 6585
ir@qiyi.com

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SOURCE iQIYI, Inc.

FAQ

What did iQIYI announce regarding the SEC and the HFCAA on March 30, 2022?

iQIYI announced it was identified by the SEC under the HFCAA due to issues with its auditor's working papers.

What risks does the HFCAA pose for iQIYI's stock?

If identified for three consecutive years, iQIYI could face delisting from U.S. exchanges.

How is iQIYI responding to the SEC's identification under the HFCAA?

iQIYI is exploring solutions to safeguard stakeholder interests and comply with applicable laws.

What fiscal year did iQIYI's recent report cover?

The report covered the fiscal year ending December 31, 2021.

What is the potential impact of the SEC's identification on iQIYI's investors?

The identification raises concerns over regulatory compliance and potential stock delisting for investors.